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Living in Sin

It's not just about splitting your rent or doubling the size of your CD collection. Shacking up outside of the official bonds of matrimony is becoming more like marriage in a lot of ways.

The rights and privileges for those who lack the license from their county courthouse have come a long way. Everyone from employers to warehouse clubs are catching up to the times, recognizing the modern reality of unmarried love and offering couples the same perks afforded to the wedded set. These days, you and your sweetheart can get health insurance, discounted dental care, and even the family rate at the local gym -- saving thousands of dollars, even while your nagging relatives tsk tsk your unofficial union.

But before you uncork the champagne, consider the following: 55% of different-sex cohabitants marry within five years of moving in together; but a whopping 40% break up within that same time period. About 10% remain in an unmarried relationship five years or longer, according to "Cohabitation in the United States," a study published in the Annual Review of Sociology.

We know that impersonal, black-and-white statistics don't capture the depth of your commitment to one another. Unmarried couples who live together face almost all of the same -- and sometimes more -- administrative money issues as their matrimonially bound counterparts.

Forgive us for interrupting your giddy state of unwedded bliss with a dose of relationship reality. However, there are some things to consider if you and your love muffin share a roof.

But mom, everybody's doing itIt's true. More and more people are shacking up outside of the official bonds of marriage. There are 5.5 million unmarried partner households in the U.S., including gay and straight couples, according to year 2000 U.S. Census statistics. That's up 72% from 1990. And it's not just twosomes in those households. Census data released last week reveals that unmarried couples who live together are just as likely as their married counterparts to raise children in the household. Click here to see a list of states with the most (and fewest) unmarried shack-ups. Is your state one of them?

Living in sin is not so thoroughly modern a trend as you might think. Look no further than your local multiplex or library for examples. Goldie Hawn and Kurt Russell have been together since 1984, with no marriage plans. Author Simone de Beauvoir and philosopher Jean-Paul Sartre shacked up for nearly 50 years, until Sartre's death.

Even grams and gramps are getting in on the action. (Think Spencer Tracy and Katherine Hepburn.) Census data shows that the number of households containing an unmarried man and woman, at least one of whom is over age 65, grew 60% to 203,000 households between 1990 and 2000.

Why not tie the knot?In the case of Hepburn and Tracy, his faith prevented him from divorcing his wife. Others who choose the unmarried life don't believe in the institution, don't feel it's necessary in their relationship, or, in the case of same-sex partners, don't have the option of official marriage.

But for many, the marriage workaround is a financial necessity. Widowed senior citizens, in particular, risk losing pension benefits if they tie the knot a second, third, or Liz Taylor-like seventh time.

For many, living together is simply a prelude to taking that next step down the aisle. About 75% of cohabitants (about 6.2 million people) say they plan to marry their partners, according to the "Cohabitation in the United States" study. In fact, the majority of couples marrying today have lived together first (53% of women's first marriages are preceded by cohabitation).

Perks that were previously off limits to domestic partners -- health, disability and life insurance, pension benefits, family leave, and mental-health counseling.

A live, live-in dishwasher with an already established personal CD collection!

A break on homeowners and car insurance from some insurance companies, such as State Farm and Allstate.

Official recognition of your relationship. According to a recent article in The Wall Street Journal, unmarried couples can make their bond official through a domestic-partner registry in about 60 municipalities or states.

Price breaks at rental car businesses.

Then there's the downside:

Less access to insurance price breaks. Though it is improving, depending on which statistics you believe, anywhere from 25% to 90% of employers offer domestic partner benefits.

More complicated legal rights. Inheritance and retirement benefits, and medical decisions are not automatically granted to life partners, as they are to married life partners.

No ring? No acknowledgment -- at least as a bona fide member of the family by his great-grandmother.

No right to alimony if you split. Recently, however, the American Law Institute suggested that this standard should be changed.

Difficulty choosing an appropriate term of endearment when introducing your partner. According to "Unmarried to Each Other: The Essential Guide to Living Together as an Unmarried Partner," the top three introductions are "partner," "boyfriend/girlfriend," and "significant other." The overly descriptive term "lover" is No. 8 on the list.

Uncle Sam considers you single in terms of income taxes. So, you'll be paying the piper on your own salary, in addition to paying taxes on the value of perks afforded to you by an employer.

Making it officialThough many of the same estate planning and medical directive rights are available to unmarried couples, the difference is they don't happen automatically. You've got to fill out the paperwork to make your wishes recognized in the eyes of the law.

Trust us; it can get ugly without the necessary legal documents. Thankfully, it doesn't take much to put a few safeguards in place, and you can go on, skipping through life, with that smile your sweetie loves so much.

First, complete these important documents:

Your will (last will and testament). You can get this from an attorney, or opt for pre-printed, fill-in-the-blank forms -- though make sure they are up to date and conform to the laws of your state.

A living will (advance medical directive). Available free at virtually every hospital in the nation.

Durable and medical power of attorney (health-care proxy). See a lawyer for this.

As you're filling out the paperwork, make your heirs apparent. Update all of your beneficiary information -- everything from your 401(k), 403(b), pension, profit-sharing, IRAs, and insurance policies to your coveted bicentennial quarter collection. If children are part of the union (as they are in one in three unmarried households), these protections are that much more important. Lawyers recommend that unmarried couples sign an "acknowledgment of parenthood" or a paternity statement for additional legal protection, in the case of one parent's death or a breakup.

Other ownership issues arise when you make big purchases together -- such as homes and cars. Discuss whether they will be jointly or individually owned/titled. And don't forget to let important people know where you keep your documents. There's only one thing worse than filling out a dead guy's tax forms, and that's doing it without access to his financial records.

Grim? Yes. Necessary? Afraid so.

Happily ever after, financially speakingAnother thing that unwed unions have in common with official married ones is what makes them last. Communication and contingency planning -- though far from romantic -- are the keys to a happy financial coupling. When the money communication is good, the satisfaction rubs off in other areas of the relationship. (We're trying to keep this article G-rated, so you'll just have to take our word for it.)

Assuming your love will last forever can leave you in a world of financial hurt, should things not work out. Why not set yourselves up for success? The couples who shared their dirty little financial secrets with us in Couples & Cash: How to Handle Money with Your Honey all agreed: Communication is key.

Yeah, we know. No surprise there. But just think about this: With money as one of the leading causes of breakups, make this one thing work, and your relationship has that much better a chance of succeeding.

If you're considering shacking up, or already do so on an informal basis, there are a lot of joint decisions to be made outside of whose couch you're going to keep. Consider some key money questions and get talking -- together. WIFE.org (that stands for Women's Institute for Financial Education, though their advice is good for both genders) advises domestic partners to put things in writing in a "Living Together Agreement." Yeah, it may feel weird to do so, which is why you should write your drafts over a decent bottle of merlot!